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Litigation View Comments

A Honeymoon Gone Bad

By Heidi Taylor on September 23rd, 2010

In our profession, lawyers are often asked questions along the lines of this:

My husband and I went on our honeymoon to Prince Edward Island for two weeks following our wedding.  The trip was horrible.  I got food poisoning, it rained the entire trip, and our hotel was undergoing renovations during our stay.  Is there any remedy for this honeymoon gone bad?

This situation reminds me of a case that was heard before the British Columbia Supreme Court in 2001. In that case, the newly married couple had elected to go on a sheep hunting trip for their honeymoon. There was no doubt that the idea for the trip came from the husband, as he thought of himself as an avid hunter. The husband also testified that he thought his new wife would enjoy the opportunity to see the Yukon, where the hunting trip was planned.

There were a scarcity of documents that outlined the details of the trip; one invoice was available, which indicated that the sheep hunt would cost $6500 plus $150 per day for the wife (as she was a non-hunter). Following the trip, the couple had a number of complaints, including that the couple had been separated during the first part of the hunt. The couple also complained that the trip was to difficult physically, and that the amenities available at the cabins were lacking.

\With respect to the couple being separated for a portion of the trip, the court found that the husband had implicitly agreed to this arrangement; he was partaking in this trip both as a honeymoon, and to hunt sheep.

In reference to the difficulty of the terrain, the hunt leader, “Yukon Bob” testified that the hunt was successful (a sheep was caught) and in Yukon Bob’s words, the hunt was one of the easiest he had been involved with. The problem was really the husband’s fitness level.

With respect to the amenities available throughout the week long trip, the camp was described as having no electricity, running water or washrooms (the washrooms were marked and euphorically referred to as the “snorting pole”). The wife described being lonely while her new husband was off on the hunt. While these were no doubt very rustic accommodations, the question before the court was whether the camp conditions had been misrepresented by the tour provider.

The Plaintiffs’ failed in their claim. The court found that the difficulties the couple experienced were primarily due to their differing expectations of the trip. The wife was looking for a romantic honeymoon while the husband was out for a hunting trip, with the honeymoon taking a secondary role. The court found that there can be no compensation for an “expectation loss”. In this case there was no contract breached, there were no misrepresentations on behalf of the trip provider and reasonable expectations of a hunting trip were met.

Those looking for compensation for a vacation that fell short of expectations will not likely be successful in their claims unless the trip was misrepresented to them by their tour provider. Any claim should be supported by either a contractual term, which was not upheld, or some literature such as a brochure or website which misrepresented the condition of your holiday. In itself, a disappointing experience, is not a legal basis for grounding a claim.

Photo used under Creative Commons license. Source.

Wills, Estates & Trusts View Comments

Dos and Don’ts for Seniors Relating to Their Personal Affairs

By Jim Herperger on September 23rd, 2010

Dos:

  1. Do have a Power of Attorney;
  2. Do have a Representation Agreement;
  3. Do chose someone you have absolute trust in; someone who does not have issues with addictions or are in bad relationships, or who have problems themselves handling money;
  4. Do put in place safeguards on when the Power of Attorney / Representation Agreement is to be released and/or triggered;
  5. Do spell out in the document whether or not the Attorney is allowed to pay him or herself for acting as your Attorney;
  6. Do spell out in the Power of Attorney document whether or not the Attorney can transfer your assets into his or her name;
  7. Do get legal advice when you prepare your Power of Attorney;
  8. Do an inventory of your assets and review same periodically;
  9. Do pay your own bills and balance your cheque book;
  10. Do get a banker that you know and have confidence in;
  11. Do review your investments periodically and in detail; and
  12. Do develop an investment strategy relating to your monies.

Don’ts:

  1. Don’t choose a person to be your Power of Attorney in order to reward them. It is NOT a reward; it is a job;
  2. Don’t invest with someone who promises wild returns. If it sounds too good to be true – it probably IS TOO GOOD TO BE TRUE!;
  3. Don’t invest with friends, your children, your church, or groups that invest through your church or through your clubs. You wouldn’t go to your banker for religious advice, so don’t go to people in your church or social groups for financial advice, unless they are professional financial advisors and planners;
  4. Don’t worry about Probate Fees. One of the few good things about passing away in the Province of B.C. is the fact that you cease paying taxes and fees. Let your children pay the Probate Fees; it’s not going to break them;
  5. Don’t put assets in joint names (unless it is with your spouse);
  6. Don’t buy homes with people who will “Look after me” there is a very good chance they won’t look after you. There is a very good chance you will get tired of them. There is a very good chance you will have a falling out and after all that is said and done, there is a very good chance you will have a hard time getting your money back; and
  7. Don’t continually bail out your children from their own bad financial decisions.

Photo used under Creative Commons license: Source.

Real Estate View Comments

Pre-construction contracts invalidated by disclosure failures

By FH&P Lawyers on September 13th, 2010

The Okanagan Valley enjoyed a 5-year property boom from 2003 to 2008 with record price levels and record housing starts. Investment and speculation certainly played a part in this boom, with the pre-construction condo market being particularly hot. Those that were able to “flip” a unit (or multiple units) prior to the slowdown made significant returns.

But very few investments are risk free. When entering into a purchase contract at a set price long before the completion of the property, the risk is that the actual market value upon completion may be far less than the purchase price committed to.

The Real Estate Development and Marketing Act (“REDMA”) is the Act that allows developers to market condominiums before they are actually constructed.  With the recent down turn in the economy, purchasers have been looking to this Act as a way to get out of contracts which are binding them to purchase condominiums at higher than current market values.

There have been several recent and interesting decisions where the courts have interpreted REDMA as a piece of consumer protection legislation and have held developers to strict requirements.  If a developer does not adhere those strict requirements, it does so at its peril of having the contract declared void.

Failure to amend disclosure statement to disclose delay in construction invalidates contract.

In Chameleon Talent Inc. v Sandcastle Holdings Ltd. (2009 BCSC), a filed disclosure statement provided for “estimated” dates for the commencement and completion of construction.  The estimated dates were missed but the amendment to the disclosure statement did not provide any updated dates.  When the project did not complete within the estimated timeframe, the purchaser sought a declaration that the purchase contract was unenforceable and an order for the return of the deposit on the basis that, by failing to amend the disclosure statement to disclose the delay in the completion of the construction, the developer had failed to comply with REDMA by not disclosing this material fact. The Court interpreted the definition of “material fact” broadly by stating that it could not think of any circumstance when the date of occupancy, or the construction completion date, would not be a material fact.  The developer breached REDMA by failing to amend immediately the disclosure statement when the estimated completion date passed and that the purchaser was entitled to a declaration that the purchase contract was unenforceable and to the return of the deposit.

Interestingly, the Court reached its decision despite the fact that there was no evidence that the purchaser, who apparently wanted to get out of the deal solely due to financial difficulty, would suffer any inconvenience, harm or damage of any kind as a result of the construction delay.

This decision was appealed and the declaration and order made by the Supreme Court were upheld in The Court of Appeal – see Chameleon Talent Inc. v. Sandcastle Holdings Ltd., 2010 BCCA 300.

Failure to provide complete set of disclosure statement amendments invalidates contract.

In Dwayne v Bastion Coast Homes Ltd. et al (2009 BCSC) the Court dealt with a question of whether a purchaser not having received all disclosure statements filed at the time the purchase contract was entered into could rescind the agreement. Prior to entering into the purchase agreement, the purchaser was given an electronic copy of the disclosure statement with respect to the development but did not receive 2 out of the 3 amendments in existence at the time.

The purchaser’s position was that section 15 of REDMA, read with the definition of “disclosure statement” in section 1, meant that both the disclosure statement and copies of any amendments that then exist must be provided to a purchaser before he or she enters into an agreement to purchase a unit and that section 21(3) gives the purchaser the right to rescind at any time if disclosure statements (including amendments) were not received.

The Court found that the purchaser did have the right to rescind and developers are not permitted to enter into an agreement of sale without having provided the purchaser with the disclosure statements in existence at that time. The remedy where disclosure statements are not provided at all is rescission of the agreement.

Additionally in Pinto v. Revelstoke Mountain Resort Limited Partnership (BCSC 2010) the plaintiffs entered into purchase contracts with the developer in March 2007.  Between April 2007 and February 2009, the developer filed seven amendments to the disclosure statement.  The purchasers claimed they received the first two amendments but not the next four.  They became aware they did not receive four of the amendments when they received the seventh amendment in February 2009.

Court stated that the requirement to provide a purchaser with amendments continues until title is passed.  By definition, a failure to deliver amendments is, for the purpose of the rescission right in s. 21(3), no different than a failure to deliver the complete disclosure statement.  In any case, the failure to deliver an amendment is a breach of REDMA, which makes the contract unenforceable.
The Court also held that nothing in REDMA requires a purchaser who does not receive an amendment to demonstrate that the receipt of the amendment would have led to a different course of action.

The developer was ordered to return the deposit to the purchasers.

Family Law View Comments

The use of pre-nuptial agreements to protect an inheritance

By Heidi Taylor on September 13th, 2010

In order to protect assets acquired prior to a relationship, I recommend to my clients that they consider a Marriage Agreement (also known as a Pre-Nuptial Agreement).  Such an agreement will outline current assets, and protect those assets on a marriage breakdown.  The agreement can protect those current assets that have been inherited by one of the spouses, as well as address how the assets acquired during the relationship will be divided should the spouses separate from one another.  Such an agreement should be entered before prior to the marriage.

The Supreme Court of Canada reviewed the validity of marriage agreements (including pre-nuptial agreements) in the 2004 decision of Hartshorne v. Hartshorne.  Prior to the Hartshorne marriage, Mr. Hartshorne asked that Mrs. Hartshorne enter a pre-nuptial agreement.  Mr. Hartshorne had previously been married and left his first wife with a substantial settlement upon their divorce.  Mr. Hartshorne was bringing significant assets to the marriage, to the tune of $1.6 Million.  Mrs. Hartshorne, on the other hand, entered the marriage with considerable debt.  The pre-nuptial agreement which was eventually entered between the parties provided that Mrs. Hartshorne would be able to earn an interest in the family home at a rate of 3% per every year the parties were married.  The other assets which the parties brought into the marriage would remain separate.  Both Mr. and Mrs. Hartshorne received independent legal advice from their respective lawyers with respect to the pre-nuptial agreement, with Mrs. Hartshorne being advised that the agreement was “grossly unfair” to her and would likely be set aside for being unenforceable, should Mr. and Mrs. Hartshorne later divorce.  Despite the advice of her lawyer, Mrs. Hartshorne signed the pre-nuptial agreement, at the insistence of her betrothed, on their wedding day!

In determining whether the pre-nuptial agreement was valid upon the break-down of the marriage between the parties, the Supreme Court of Canada considered certain principles.  One of these is the fairness of the division of property as contracted under the marriage agreement at a specific point in time.  In Hartshorne, the parties maintained separate finances during their relationship and there was no commingling of their funds, no joint accounts, and the assets brought into the marriage by Mr. Hartshorne remained in his name.

Additionally, a majority of the property was acquired by Mr. Hartshorne before the parties commenced cohabitation.  Finally, and most importantly, the parties’ lives had unfolded “just as the parties had expected”.  There was no change in circumstances between the parties which could not have been foreseen when the pre-nuptial agreement was signed.  Following the Hartshorne decision it has become increasingly difficult to set aside marriage agreements following a marriage breakdown.

In order to ensure that the Marriage Agreement is fair, both spouses need to get independent legal advice.  It would also be a good idea to keep finances separate during the marriage.  Of course, all couples who are getting married hope they will never have to use their Marriage Agreement, but they are a good source of protection should the marriage ultimately break down.